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RESEARCH AND ANALYSIS: WORKING PAPERS

Reassessing Effective Protection Rates in a Trade in Tasks Perspective: Evolution of trade policy in "Factory Asia"

With international trade moving from "trade in (final) goods" to "trade in tasks", effective protection rates (EPRs) are back to the stage, allowing us to measure the overall protection of a product or sector by including the production structure and the origin of the inputs -domestic or imported.

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Input-output matrices are used in this paper to monitor the production structure of 10 Asian-Pacific countries between 1995 and 2005, and to calculate sectorial EPRs. The paper proposes a series of counter-factual simulation methods aimed at isolating the specific contribution of changes in tariff policies, in production structure or in real exchange rates. Working on international input-output matrices allowed also to compute and compare the average propagation length of a cost-push linked to a sudden change in tariff duties, identifying those sectors that are the most deeply interconnected, both in the intensity and in the length of their inter-industrial foreign relationships.

No: ERSD-2012-13

Authors:

Antonia Diakantoni and Hubert Escaith

Manuscript date: September 2012

Key Words:

Tariff, Effective Protection, Trade in Value Added, International Outsourcing, Asian Input-Output.

JEL classification numbers:

F13, F23

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This is a working paper, and hence it represents research in progress. This paper represents the opinions of the author, and is the product of professional research. It is not meant to represent the position or opinions of the WTO or its Members, nor the official position of any staff members. Any errors are the fault of the author. Copies of working papers can be requested from the divisional secretariat by writing to: Economic Research and Statistics Division, World Trade Organization, Rue de Lausanne 154, CH 1211 Geneva 21, Switzerland. Please request papers by number and title.

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